Increasing wealth and ageing populations have led to growing holdings of dollar-denominated portfolios of institutional investors and asset managers in Asia's emerging economies, the BIS said.
By Daniel Leussink TOKYO (Reuters) - Asia's emerging economies should improve oversight of foreign exchange liquidity risks and make currency hedging .
Asia's emerging economies should improve oversight of foreign exchange liquidity risks and make currency hedging more flexible as growing dollar investments make the region more vulnerable to currency swings, the Bank for International Settlements said.
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<p><span>Non-bank financial intermediaries (NBFIs) have grown significantly. Their activities can amplify market stress and undermine financial stability.</span></p>
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<p><span>A macroprudential regulatory approach is needed to address the structural vulnerabilities in NBFIs, most notably liquidity mismatches and hidden leverage.</span></p>
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<p><span>Concerns about a new virus variant late in the period under review<a href="https://www.bis.org/press/p211206.htm# ftn1" name=" ftnref1" class="hashlink"><span class="firstword">1</span></a> curtailed investors risk appetite. Financial conditions tightened in several emerging market economies where inflationary pressures persisted.</span></p>
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